When you go to buy a house are you better off making a big down payment OR making a minimum down payment and investing the remainder? Perhaps in RRSPs TFSA or stocks and bonds?

Around 1980 we bought a mobile home with the intention of saving for two to three years and then selling it to buy our first house. We put a little over $25,000 down, the payments were significantly lower than we were paying as renters, so we figured this would be a good financial move for us so we could buy our first house with a really good down payment. The plan flopped, interest rates soared, real estate values plummeted, and unemployment sky rocketed....the stock market tanked too!

To make a very long story shorter, we couldn't sell it and we got stuck there for ten years. Property values were still horribly depressed and when we did find a buyer we only recovered about $1500 of our original down payment. :-(

Now when I read about the people in the USA losing homes in a similar situation I cannot help but hope many of them didn't "put all their eggs in one basket" like we did back then. I know with the times we went through we would have done far better if we had kept our life savings anywhere but in buying that home. To this day I still think real estate is a very risky venture and am reluctant to pay down a mortgage in case a similar scenario ever plays out again.

How do you read this? Are you better off putting a large down payment on your house Or should you keep as much as possible invested in more liquid assets, and put down a minimum down payment? Keep in mind that $300,000 house your buying could be worth only $150,000 in a couple of years or even months!!